Hi all,
Is it me or Schweser los 29 do not have any calculations in term of calculating growth rates, and all other items that we must forecast. For instance: Company with 2 product lines A, and B. Total sales in X1 = 88.9 Total sales in X3= 530.5 The annual growth rate = [530.5/88.9]1/2 -1 I have no idea how to do this. Can someone explain why we are ^(1/2)? whats going on here? lol Thanks
You’re raising to the ½ power because you have two years of growth and you’re asked for the annual growth rate. One year is one-half of two years.
Ah I see. Then if they say what is the cumulative average growth rate of customers from Year 1 to Year 4
Year 1 customer count: 20 Year 4 customer count: 100 Then it’ll be [100/20]^(1/4) -1
If so, thank you so much.
Not quite.
4 − 1 = 3 , so it’ll be [100/20]1/3 − 1 = 71% growth per year.
darn, okay, got it. I appreciate your help. Thank you so much sir.
My pleasure.